Bulk & Block Deals
These are large transactions made by promoters, mutual funds, financial institutions, insurance companies, banks, venture capitalists, and foreign institutional investors that have the power to control the movement of stock prices.
Bulk and block deals done on exchanges are keenly watched by market participants daily as they indicate the interest of big investors in the stock. Though these two terms sound similar, there is a difference between them. Here’s what they mean and how investors should interpret them
Block deal is a trade, with a minimum quantity of 5 lakh shares or minimum value of Rs. 5 crores, executed through a single transaction, on the special “Block Deal window”. The window is opened for only 35 minutes in the morning trading hours. A Block deal happens when two parties agree to buy or sell securities at an agreed price between themselves and inform the stock exchange. The orders in a block deal are not shown to the people who trade from the normal trade window.
Market regulator SEBI (Securities and Exchange Broad of India) has also made it mandatory for the stockbrokers to disclose on a daily basis.
Stock exchanges should disclose the information on block deals to the public on the same day after market hours. This should contain information bits like the name of the scrip, name of the client, the number of shares, traded price, etc
A bulk deal is a trade, where the total quantity bought or sold is more than 0.5% of the number of equity shares of a listed company.
Bulk deal can be transacted by the normal trading window provided by brokers throughout the trading hours in a day. Bulk deals are market-driven and take place throughout the trading day.
The stockbroker, who facilitates the trade, is required to reveal to the stock exchange about the bulk deals on a daily basis.
Bulk orders are visible to everyone. If the bulk deal happens through a single trade, it should be notified to the exchange immediately upon the execution of the order. If it happens through multiple trades, it should be notified to the exchange within one hour from the closure of the trading
To facilitate block deals, stock exchanges provide a separate trading window for only 35 minutes at the beginning of the trading hours.
The transaction price of a share ranges from +1% to -1% of the previous days closing or the current market price. These transactions take place on a delivery basis.
Transparent disclosure of trade transaction details such as the name of scrip, name of the clients (Buyer and Seller), the number of shares bought/sold, and traded price have to be made by the broker to the exchange immediately. The exchange has to furnish all the transaction-related information to the public markets on the same day as the block deal transaction, after the closing of trading hours